Chelsea Follett: Brian Domitrovic is the Richard S. Strong Scholar at the Laffer Center in Nashville. He is the author or editor of seven books on such topics as the history of supply-side economics and the history of monetary policy in the United States. He is a contributor to Forbes.com and has taught at universities in Texas, Colorado, Massachusetts, and Pennsylvania. And Brian holds a PhD in history from Harvard University, where he also did graduate work in economics. But he joins the podcast today to discuss a history topic, specifically the Gilded Age and whether we’re living in a new Gilded Age, and if we have time, maybe also the legacy of President Garfield, a related topic. How are you, Brian?
Brian Domitrovic: I’m fine, Chelsea. Thanks for having me.
Chelsea Follett: So you have this recent piece in Law & Liberty, Liberty Fund’s publication, called “Gilded Glory.” And it starts off by noting that the Gilded Age is having something of a political moment right now. Actually, for a few years now it’s been. Politico ran a piece titled “The Gilded Age is Back” earlier this year, 2024. In 2024, ABC News ran a piece titled “We Are in a Second Gilded Age,” similar theme. And of course, there’s the HBO series The Gilded Age. If you go back to 2022, the Met Gala’s theme was the Gilded Age. So people are very interested in this time period and they keep comparing it to our present one. What is going on with that?
Brian Domitrovic: Yeah, I mean, I appreciate the efforts of these commentators to make useful historical analogies. I think what is going on is that there’s a little bit of a misapprehension about what the Gilded Age was all about. The Gilded Age traditionally is understood to be the post-Civil War generation and a half, maybe 1865 to 1910. And it is absolutely true that fantastic fortunes came about in that period. And the term Gilded Age implies that, well, there were fantastic fortunes and then everyone else was scrambling. And it seems maybe that’s what we’re going through today with Elon Musk and everyone else.
Chelsea Follett: That’s the popular impression. But the theory that you put forward in your piece is a bit different than that common narrative. Tell me about what you argue.
Brian Domitrovic: Yeah, I argue that any real kind of dedicated acquaintance with the enormous source base of American history of that period, and the generation after the Civil War, will really make the case kind of inescapable that this is one of the most remarkable periods of human civilization that one is ever likely to encounter in any study of history. I mean, this is when, first of all, the American economy absolutely took off like a rocket for absolutely everybody. It was the introduction and the perfection, I might say, of the phenomenon of mass prosperity. And so my first reaction was, well, to call this a new Gilded Age… I mean, we’re not allowed to. I mean, we’re just some little whippersnapper trying to say we’re the best economy in the history of the world, because that’s really what the Gilded Age was.
Chelsea Follett: Right. You say we can only wish that we were living through a new Gilded Age. That is quite a statement. It goes against the popular impression of the Gilded Age. So let’s walk through your case that the Gilded Age is not quite what we have today, and in fact, we should be trying to emulate it, if anything. You write, “The American economy in the quarter century after 1865 remains, without exaggeration, the greatest example of material development and the expansion of mass prosperity in world history.” Tell me about that.
Brian Domitrovic: Yeah, I mean, the American economy became the largest in the world. We have great economic statistics about this sometime in the 1880s. And that was not just some random period of history. This was in the greatest boom of what we call the second Industrial Revolution. Kind of the greatest expansion of world history was happening at that time. And that’s when America seized the leadership of the world economy. So your head spins just if you look at the statistics. The two greatest decades of American economic growth, if you look at the blunderbuss GDP statistics, are the 1870s and the 1880s. And they’re consecutive, 6% growth per annum. And off a high base too, the post-late 1860s base. The two greatest decades of 6% growth per annum. Ours is 2% today, if we’re lucky. So we’re talking about triple the rate of economic growth for the space of 25 years. And it’s just stunning to me that we would say, “Oh, we’re just like that.” No, no, we’re stagnating in comparison to that.
Chelsea Follett: It really is difficult to conceptualize that rate of economic growth. But you make it concrete in the piece by pointing out how that affected the material standard of living along a number of dimensions. You start with housing, for example. Tell me about what was going on with housing during that time period.
Brian Domitrovic: Yeah, Chelsea, I draw on the really remarkable book that Robert Gordon, the great economic historian from Northwestern who used to be at the University of Chicago, he published what Bill Gates called one of his favorite recent books of all time, a book called The Rise and Fall of American Growth about 10 years ago. And it’s an absolutely comprehensive statement of what happened to the standard of living after 1865. And I think Vincent Geloso is coming up with another book on this topic. I know that’s going to be great. And one of Gordon’s points, and he has a ton of them, but one of his points is that the housing stock in the United States completely turned over after 1870. Like the entire housing stock of the United States from 1870 to like 1910 was completely new. And it was of such higher quality than what had come before. What had come before were some pretty mean constructions outside of farmhouses in the United States. The entire urban built environment came after 1865. And he points out how exceptionally high quality these structures were, even astonishingly, the tenements of New York City.
Chelsea Follett: Right, because they had electricity, they had plumbing, they had so many things that we take for granted today. But at the time, that was unprecedented that ordinary people would have those sorts of amenities in their home. Is that correct?
Brian Domitrovic: Yeah, he says, look, all a tenement is is just a… It was defined as a building that had three or more living units. And in particular in New York City, these things sprang up like crazy. And he says they were networked for plumbing, for heating, and then soon for electricity and communication systems. And so they had water, sewage, everything. And whereas before that was almost unheard of. There were maybe a few places in cities that had that stuff. This became de rigueur through from 1870 through 1900. And he said the increase in the standard of living was simply astronomical. And he particularly calls to account How the Other Half Lives, Jacob Riis’s volume of 1890, pointing out that these pictures of squalor among lower-earner housing in the United States at that time in New York City at the Lower East Side, were totally unrepresentative of the standard of living of the average kind of workman, handicraftsman in the United States. And then he comes up with all sorts of alternative evidence indicating that the handicraftsmen in Cleveland, Ohio, and in other places in New York City were living at a standard that blew away the English visitor. It was like, “I can’t believe these working-class houses are so nice and so clean and so fresh and they have garden plots and wow, why can’t we have working-class housing like this?” That was kind of the universal perception of visitors to the United States in 1888. So the idea that we look at How the Other Half Lives as a testament of that era, as the evidence of that era, is a historical mistake of kind of dramatic proportions.
Chelsea Follett: And you contrast this to the housing affordability political issue in today’s discourse and how different that situation is really from the housing circumstances of the Gilded Age.
Brian Domitrovic: Yeah, now that’s funny. When we hear we’re in a new Gilded Age and our big vexation today is that young people can’t afford homes. Now, that is completely different from the Gilded Age. The Gilded Age pioneered the concept of young people being able to afford homes. I mean, that was the calling card of the Gilded Age. Look at all this housing, and it’s really cheap and it’s really good, and everyone bought it. So it’s completely out of place to compare ourselves to the Gilded Age on the criterion of “can people afford homes?”
Chelsea Follett: And it’s not just housing. Also, you explore what was going on with food production and then clothing production during the Gilded Age. Tell me about those things as well.
Brian Domitrovic: Yeah, I mean, the United States after 1865 moved decisively away from having to preoccupy itself with the rude necessities of life, just kind of basic food, clothing, and shelter. It had certainly made progress on that score prior to that, but just decisively moved away from that freedom from want being a huge problem. And so all of a sudden, people were set up in homes that were really well-constructed and networked and just great places to live. The question of clothing… I mean, now clothing had been mass-produced since the 1810s and so forth, but all of a sudden, closets had to be added to the architecture of home just because people had started to have so many ready-made outfits. And then food is another section entirely. We can talk about housing and all that stuff, but one might say that the greatest economic advance of the Gilded Age came from farm engineering. The mechanization of agriculture just essentially eliminated the problem of food production. And that ended up having the most far-reaching consequences for American life, including in its aesthetics, in its culture. And that’s what I devoted the rest of the piece about.
Chelsea Follett: Right. You claim in the piece that the mechanization of agriculture was not only one of the great accomplishments of the Gilded Age, but that it enabled both ecological conservation and this rebirth of architecture you just alluded to. You write, “After 1865, the United States came to need its lands less for the rude necessities of life. Farming for a rapidly growing population, an increasing portion in cities, called for ever less acreage because of the fantastic advances in productivity.” Tell me about that.
Brian Domitrovic: Yeah. So I mean, it must have been a sight to see. The American people needed every ounce of land that they had, dating back to the colonial period, in order to push crops out of the ground and to raise livestock. I mean, we still see this in the original aerial photography that we have of this country from the earliest days of aviation, from maybe the teens and twenties, where you can still see these incredibly large distances that are just clear-cut. Clear-cut, clear-cut, clear-cut. And that was where the ecological disasters of the 19th century, the elimination of species and birds and all that stuff came from, because so much land had to be clear-cut because farming had to produce crops for people to eat and to husband animals. Well, the mechanization and other scientific advances in agriculture really reversed that after 1865. The number of farm plots just sank like a stone. And then you just had land available for whatever you wanted to do with it. And there were three major options there. So farming became super productive, could produce food for people living in cities on very small plots suddenly. And the extra land that then could be given up was either preserved because it was so beautiful, the national parks, Yosemite and so forth, it was built upon. You look at the plat books. The plat books of this time are amazing. You see all these farms that are now being zoned into housing and buildings. And then the third option was you could just let it reforest. And of course, we know there was a great reforestation in the 20th century that was coincident with suburbanization. That process got fully started with the Gilded Age. These are all wonderful things. And it all happened because of the mechanization and the genius in developing agriculture, agricultural productivity. And the thing I have to say about architecture is, boy, was the architecture good.
Chelsea Follett: Well, it seems like you can say a little bit more about it than that. Why do you think that they specifically were able to create all of this beautiful art, beautiful architecture in that era?
Brian Domitrovic: Yeah, really, American architecture owes its origin to the fantastic economic successes of the Gilded Age. It was actually the making available of land and the development of an urban society, which needs huge farm production in order for urban society to exist, that enabled American architecture. There really would not be an American architecture at all outside of the fantastic economic and agricultural successes of the Gilded Age. I mean, you can think of, what are the American architectural highlights prior to 1865? Really, they’re almost confined to just kind of the colonial and federal period, which are very kind of hardscrabble. You know, like Harvard Yard is, what Lewis Mumford called it, homely in the best sense, barely sneaks out of the ground, this society was so desperate at the time it was made. That’s not the case after 1865. After 1865, you have a society that can feed itself and that can now choose plots of land in its riches to build on and to build kind of not monuments to itself, but great spaces for it to live and to conduct its business. And this is where I called on the great architectural historian Lewis Mumford, who in the 1930s wrote a great book called The Brown Decades, in which he wanted to rescue the Gilded Age from its reputation. Because even then he said, “You know, our grandfathers’ generation,” he said in the 1930s, “is still sneered at in that New Deal era, in the 1920s even, as rude, as they weren’t as cultured as we are, they’re not as sophisticated.” And he’s like, “Hey guys, this is the greatest architecture America ever created, and it’s actually the beginning of real American artistic greatness.” His favorite architect was H.H. Richardson. I can’t imagine anyone else’s would be, if you ask me. And he talked a lot about the painting, too, about Thomas Eakins and how they really kind of captured the national mood of that time, which was somber after the Civil War, but very can-do.
Chelsea Follett: Now, this is a very counterintuitive narrative of the Gilded Age. It’s very different from the way we think about the Gilded Age normally or the public thinks about it. And you do have some caveats to what you write. For example, you’ve got one part of the piece where you say, “Setting aside the rapaciousness, the word for which the Gilded Age is known, the ultra-competitiveness of the captains of industry, the corruption of government officials, starting with customs collectors, principal one of which, Chester Arthur of the Port of New York, became president, the emergence of peonage where there had been slavery.” I mean, these are pretty big caveats, are they not?
Brian Domitrovic: Yeah. I mean, there’s absolutely no reason to romanticize the Gilded Age. I mean, its economy was just fantastic. So I mean, that’s why all the immigrants came to the United States, because the streets were paved with gold. But all societies have their unique problems, and there were problems in the Gilded Age. There were often employers and businessmen who were rapacious, and because they didn’t check it, and they were urged sometimes by their colleagues to check it, that did give a fillip to an unproductive labor movement and to government employment and to all these alternatives to being involved in the market economy. Yeah. But there were some very good men there too. I mean, what does Ron Chernow say about Rockefeller? Yeah, when he was bad, he was bad, but when he was good, he was very good. I mean, so there are a lot of highlights in the Gilded Age. Political corruption was the name of the game in many ways, and we could go into that if you like, and the solutions to the political corruption were not ideal. And yeah, I mean, the racial question I don’t go into really beyond a couple words in this piece, but if I did, I would indicate that there’s a big discourse, especially kind of within black discourse today, about… There are a lot of highlights to black history in the 1880s, 1890s. In fact, there are a lot of blacks who were getting really rich. You look at what Charles Whitaker’s book about Pittsburgh at the time said, there were a lot of business partners of Andrew Carnegie who were black and getting really rich. I didn’t go into that in the piece. But whatever we say about the kind of the caveats to how well the Gilded Age served American society, we have to be careful about those caveats too.
Chelsea Follett: And you make a big distinction between the period up through the 1880s and then the 1890s. And you say that actually the 1890s might be a fair comparison to our current era. Why is that?
Brian Domitrovic: Yeah, now I didn’t talk about this in the piece, but there was a big engineered, government-engineered recession, depression in the 1890s, completely engineered by the federal government. They passed a huge tariff in the 1890s and had no idea what to do with their monetary system. They demonetized silver and just made it immediately redeemable in gold and then started coining silver like crazy. And so people took it to the bank to get gold back, and it caused this huge gold crunch in 1892, and they had to get J.P. Morgan to bail them out. And meanwhile, the banks were bereft of money. Thanks, federal government. The Cato Institute’s Richard Timberlake did such good work on that in his book Constitutional Money and in his Monetary History of the United States that he wrote with Cato. So thanks a lot, government, for the tax increase and the monetary distortion that caused the Great Depression of the 1890s. So yeah, economic growth collapsed for a little while there in 1893, and it was kind of a slow crawl back. And so yeah, I’ll take that as a comparison to our 2008s and all that stuff. Sure. And that’s when you had the real labor agitation and all that stuff. Okay. When we’re growing at 2% per year, I can tolerate a comparison with our own day. Not when we’re growing at 6% per year.
Chelsea Follett: You go into some detail about the debates on monetary policy and tax issues and how those are responsible for what happened in the 1890s. Tell me about those debates.
Brian Domitrovic: Yeah. So the big switch that happened by the end of the Gilded Age is that we went from a kind of a tariff and excise tax system at the federal level to an income tax system. That started in 1913. And we also went from having a very light federal role in the banking system, although not totally light, a relatively light federal role in the banking system, to a very pronounced federal role in the banking system with the creation of the Federal Reserve, also in 1913. And those issues in the 1890s and early 1900s were paramount, like what kind of tax system the nation should have and what kind of monetary system it should have. Those issues were somewhat interesting in the 1870s and 1880s, but the country was succeeding so much, it was kind of buried. But when the recession hit in the 1890s, and again, that recession was entirely caused by the federal government, these questions were really thrown open. And then they resulted in these reforms of 1913, which have not served the country well at all.
Chelsea Follett: You do go into some detail about those reforms as well. You write, “Americans eventually turned on the Gilded Age,” that still, I think, reflects how many people think about the Gilded Age, “demanding in the institutions of 1913 a means to confer to the government power, more power over the dollar, and a means to stifle the accumulation of assets.” So worries about inequality, which you often hear of today as well. Tell me about that.
Brian Domitrovic: Yeah, I mean, that’s another astonishing thing. We would say we would compare ourselves to the Gilded Age, and we have an income tax that at the top takes 40% of income. Well, there was no such thing in the Gilded Age. So why would we make that comparison favorably? Yeah, so the income tax came about through a lot of agitation beginning in the 1890s. And I’m still not clear why it came about. I understand it was to replace the tariff, and the tariff was the most contentious issue in American politics, even including slavery, throughout the 19th century. There’s a lot of work in history about that. And the whole point of the 1913 reform was to diminish the tariff and establish an income tax. I don’t know. Andrew Mellon said in the 1920s, when he was Secretary of the Treasury, if you have a very small income tax just on the highest earners, you could actually remove taxation as a political issue because the highest earners could pay it without thinking about it, and then they could fully fund the government if the government stayed small, and you could just not even worry about taxation again. Andrew Mellon actually said that. So maybe that’s the reason they did it in 1913, I don’t know. But ultimately what happened, of course, is it became absurdly progressive and caused the Great Depression and stagflation in the ’70s and our stasis today. It’s just been a big disaster.
Chelsea Follett: You also have a recent piece in Forbes that is related to the Gilded Age titled “The Garfield Presidency’s Resurgence in National Memory.” And that relates, of course, to the recent hit series Death by Lightning about the assassination of President Garfield, which I watched. I enjoyed it. It was a good show. But you again in this piece point out that we have nowhere near the economic growth rates of that era. It’s actually very different from ours. And you write some interesting things about what you call the self-discrediting system of taxation and civil service that they had at the time. And you have a sort of optimistic spin you give to that whole system. So first, for those who are not well-versed in that, explain what was going on with taxation done through tariffs at the time and the civil service at that time, how that system was self-discrediting, and why you nonetheless actually have a sort of optimistic view about how things were functioning under that system.
Brian Domitrovic: Yeah. I actually think, I’m glad you asked me that, Chelsea. I actually think that two major ways that the government taxed and spent in the old days before 1913 had at their core what I call self-discrediting mechanisms. And I think that was very important for the success of the country at large, economically and culturally. And I think a lot of heavy hitters agree with me, like Nathaniel Hawthorne, only kind of the greatest author in American history. So what I mean by that is the tariff, the tax system, which is duties on imported goods, always openly advertised itself as a favor-trading machine. So captains of industry always said, “Oh yeah, I’ve bribed a congressman so I can get this tariff on sugar so I don’t have a competitor.” They always said that. And it was always clear that these congressmen are being paid off by their lobbyists and corporate doers because of the tariff. And so the assumption was the tariff is dirty, it’s kind of disgusting, and therefore it should be small. Maybe we have to tolerate it for government revenue, but because it’s so nasty, it should be small. It should not be big, it should be small. And what did it reel in? 2% of GDP. Government was 3% of GDP. Small government, great economy.
Brian Domitrovic: And I think the same thing for how the government spent its money. It was self-discrediting. It spent its money on government employment. And prior to the 20th century, government employment… It’s hard to kind of recapture this. And I know some people think this is impolite and so forth, certainly Barack Obama did. Government employment had an absolutely terrible reputation in the 19th century. And I pointed in the piece to only the first entry in American literature, which is the Nathaniel Hawthorne Scarlet Letter. I mean, begins… Its entire opening chapter is dedicated to how unimpressive working for the government is, being the kind of person who works for the government. That’s Nathaniel Hawthorne’s entire first chapter to The Scarlet Letter, which again is the first entry in the entire American literary tradition. And what I sense is that opinion was global in American history in the 19th century. Yeah, if you work for the government, you’re really kind of a ward of the state. And there’s so much going on in the economy, so you must not have any ambition. It’s a shame. And so government employment was self-discrediting. It advertised itself as not an impressive thing to be doing. And so therefore the economy did not demand a lot of it. Just like with the tax system. Oh, the tax system’s lousy, have a little bit of it. The government spending system’s lousy, have a little bit of it. Government spending was 3% of GDP. The economy was the greatest ever.
Chelsea Follett: Whereas now, tariffs unfortunately are viewed more positively by many people, even though there are still rather obviously some favor-trading situations going on there. And you also have among some people a very idealistic or romantic view of the bureaucracy, and the bureaucracy has exploded. So tell me about those changes.
Brian Domitrovic: Yeah, I think we now have the opposite situation where the tax and the spending system are not self-discrediting but self-praising. They’re self-reinforcing. So the income tax presents itself as moral, we’re taking from the rich, giving to the poor, whatever that is, ability to pay. And the spending system sees itself as necessary and good, necessary and proper. That it’s almost noble, both of them. So we’ve gone from a situation where the self-conception of both the tax and the spending systems were self-discrediting, but now the self-conception of both the tax and spending systems is that they’re noble. And of course the economic performance has been way worse since 1913 in this country than it was before. So I think it would be very useful for the United States to reintroduce itself to the idea of self-discrediting tax and spending systems, because when we had those, we had a much better economy than under the moral, noble ones.
Chelsea Follett: It’s a fascinating argument, but your key point really does seem to be that you keep returning to that the incredible rate of economic growth during the Gilded Age was so positive in terms of the standard of living for ordinary people. Vincent Geloso’s new book, I believe, argues that the alleged growth in inequality during that era was not quite what people now commonly believe as well. And so you advocate trying to actually emulate the Gilded Age in terms of getting back to these higher rates of economic growth. What lessons do you think we can learn from the Gilded Age to try to approach that level of economic growth?
Brian Domitrovic: Yeah. Okay. Well, I might take a say a couple things. The first thing is that mass prosperity is totally possible, especially in the United States. So we’ve had it big time in our past, and this is the greatest era of it. Not like the ’50s, nuh-uh, the Gilded Age. And the secret to it clearly was small government. Now, the further point I’d like to make is when you have real mass prosperity like we had then, you really get human flourishing. I know people throw that term around all the time now, but you can really discover it. You look at the art, the architecture, the culture of that period, you look at the greatest critics, and you enter into an Emerald City. So you really get great stuff when you have serious economic growth. You don’t get like these huge disparities of wealth that just ruin your society. No. You get really what the human being is capable of doing in civilization. So I like to take it beyond economics to culture and art, aesthetics. And there the Gilded Age is kind of a window into these celestial things that we can accomplish with great economic growth.
Chelsea Follett: Today, another big difference between the Gilded Age and our current era, besides different rates of economic growth, would be the sense of optimism or pessimism in society. You talk about this as well. Obviously, in many ways the standard of living is much higher today than in the Gilded Age. And yet there is this great sense that many people have that life is on a downward trajectory. And that probably fuels this interest that the public now has with the Gilded Age. How do we recapture that sense of optimism, that can-do attitude that you described that characterized the Gilded Age?
Brian Domitrovic: Yeah, the funny thing, Chelsea, about the Gilded Age, it certainly was optimistic and certainly was can-do. There can’t be any question about that. Look at its remarkable achievement sustained for so long. But at the same time, as Mumford says, calling his book The Brown Decades, its mood was somber and its attitude, as he calls it, was autumnal. And he says that’s why all the colors of the architecture and the art were so russet and so deep red and brown. Brownstone became the great New York City building because, he said, it was part of the mood of the time, the darker mood. And the darker mood came from reflection on the Civil War. And the Civil War killed 660,000 people in the United States. And everybody in the Gilded Age had a shelf full of daguerreotypes and photographs and portraits of their relatives who were killed in the war or who’d starved or whatever. I mean, the remembrance of the convulsion of the Civil War was everywhere in the Gilded Age. So there was that somberness. But what it did, and I contrast this to sometimes in the Confederacy, Faulkner said in Absalom, Absalom! , his narrator is this woman in the attic who’s just a woman in the closed light room who just sits there and mumbles through the 1890s about all the terrible events that happened during the war. That’s not what happened at large in the country. At large in the country, people just took the hit of the Civil War. Lincoln said the Almighty has his own purposes. I don’t know why we had this, but we had it. And they just took the hit and said, “Okay, let’s be somber, but let’s get down to what we can control.” And we can control having the greatest economy and the greatest culture, so let’s go.
Chelsea Follett: Well, on that very positive note, how you can, even coming out of a very negative situation, obviously we’re not coming out of a Civil War now, but we have just not that long ago experienced a devastating global pandemic with all of the policy responses to that as well, right, you can come out of a very negative situation and have an incredible period of economic growth with the right policies and attitude, right? Well, thank you so much for speaking with me, Brian. This has been fascinating.
Brian Domitrovic: Good, good. I’m glad we talked. Yeah, thank you very much.